IFRS Restatement

Mears Group PLC 21 March 2006 Unaudited presentation of Financial Statements prepared under IFRS Mears Group PLC has voluntarily elected to adopt International Financial Reporting Standards (IFRS) for the year ended 31 December 2005. The date of transition to IFRS is therefore 1 January 2004 with the transitional year being the year to 31 December 2004. The preliminary results for the year ended 31 December 2005 were released on 21 March 2006. The purpose of this announcement is to explain how Mears Group PLC's financial performance for the year ended 31 December 2004, and its financial position as at that date, presented under IFRS, differs to that previously reported under UK Generally Accepted Accounting Principles (UK GAAP). The financial information contained in this announcement is unaudited. This does not constitute statutory accounts as defined by section 240 of Companies Act 1985. A copy of the statutory accounts for the year ended 31 December 2004, which were prepared under UK GAAP, has been delivered to the Registrar of Companies. The adoption of IFRS does not affect the underlying performance of the business and turnover remains unchanged. The adoption also has no impact on cash generated from operations. The reconciliations and explanatory notes describe the impact of the adoption of IFRS on the results of the Group for the year ended 31 December 2004, six months ended 30 June 2004 and six months to 30 June 2005 Profit and loss reported under UK GAAP for the year ending 31 December 2004 is reconciled to IFRS as follows: UK GAAP Goodwill Share-based Deferred tax IFRS amortisation payments £'000 £'000 ---------------- ------- -------- ------- -------- -------- Sales revenue 173,685 - - - 173,685 Cost of sales (128,766) - - - (128,766) ---------------- ------- -------- ------- -------- -------- Gross profit 44,919 - - - 44,919 Administrative expenses (38,081) 664 (315) - (37,732) ---------------- ------- -------- ------- -------- -------- Operating result 6,838 664 (315) - 7,187 Share of operating result in associate 4 - - - 4 Finance costs (68) - - - (68) ---------------- ------- -------- ------- -------- -------- Result for the year before tax 6,774 664 (315) - 7,123 Tax expense (1,855) - - 95 (1,760) ---------------- ------- -------- ------- -------- -------- Net result for the year 4,919 664 (315) 95 5,363 ---------------- ------- -------- ------- -------- -------- Profit and loss reported under UK GAAP for the 6 months to 30 June 2004 is reconciled to IFRS as follows: UK GAAP Goodwill Share-based Deferred tax IFRS amortisation payments £'000 £'000 ----------------- ------- -------- ------- -------- -------- Sales revenue 81,331 - - - 81,331 Cost of sales (61,082) - - - (61,082) ----------------- ------- -------- ------- -------- -------- Gross profit 20,249 - - - 20,249 Administrative expenses (17,345) 344 (130) - (17,131) ----------------- ------- -------- ------- -------- -------- Operating result 2,904 344 (130) - 3,118 Share of operating result in associate 3 - - - 3 Finance costs (32) - - - (32) ----------------- ------- -------- ------- -------- -------- Result for the year before tax 2,875 344 (130) - 3,089 Tax expense (911) - - 45 (866) ----------------- ------- -------- ------- -------- -------- Net result for the year 1,964 344 (130) 45 2,223 ----------------- ------- -------- ------- -------- -------- Profit and loss reported under UK GAAP for the 6 months to 30 June 2005 reconciled to IFRS as follows: UK GAAP Goodwill Share-based Deferred tax IFRS amortisation payments £'000 £'000 ------------------- ------- -------- ------- -------- -------- Sales revenue 96,295 - - - 96,295 Cost of sales (68,710) - - - (68,710) ------------------- ------- -------- ------- -------- -------- Gross profit 27,585 - - - 27,585 Administrative expenses (23,312) 283 (235) - (23,264) ------------------- ------- -------- ------- -------- -------- Operating result 4,273 283 (235) - 4,321 Share of operating - - - - - result in associate Finance costs 6 - - - 6 ------------------- ------- -------- ------- -------- -------- Result for the year before tax 4,279 283 (235) - 4,327 Tax expense (1,278) - - 55 (1,223) ------------------- ------- -------- ------- -------- -------- Net result for the year 3,001 283 (235) 55 3,104 ------------------- ------- -------- ------- -------- -------- Earnings per share reported under IFRS for the year ended 31 December 2004 and six months to 30 June 2004 and 30 June 2005 are as follows: -------Basic------ ------Diluted------ 6 months 6 months Year 6 months 6 months Year 2005 2004 2004 2005 2004 2004 p p p p p p --------------- ------- ------- ------ ------- ------ ------ Earnings per share 5.35 3.87 9.32 4.95 3.63 8.71 Effect of eliminating share based payments 0.31 0.15 0.38 0.29 0.14 0.36 Effect of full tax adjustment (0.15) (0.10) (0.66) (0.14) (0.09) (0.62) --------------- ------- ------- ------ ------- ------ ------ Normalised earnings per share before share based payments 5.51 3.92 9.04 5.10 3.68 8.45 --------------- ------- ------- ------ ------- ------ ------ The remeasurement of the consolidated balance sheet items at the IFRS opening balance sheet date and at 31 December 2004, together with the reconciliation of the Group's equity reported under UK GAAP to its equity under IFRS as at 1 January 2004 and 31 December 2004 may be summarised as follows: The Group Note UK GAAP Effect of IFRS transition £'000 £'000 £'000 --------------- ------- ------- ------- ------- At 1 January 2004 Pension obligation 1.2 - (88) (88) Proposed dividend creditor 1.3 (573) 573 - Deferred tax asset 1.4 - 900 900 --------------- ------- ------- ------- ------- Total adjustment to equity 1,385 Total equity - UK GAAP 12,292 --------------- ------- ------- ------- ------- Total equity - IFRS 13,677 --------------- ------- ------- ------- ------- At 31 December 2004 Goodwill 1.1 10,406 663 11,069 Equity accounted investments 1.1 48 1 49 Pension obligation 1.2 - (142) (142) Proposed dividend creditor 1.3 (815) 815 - Deferred tax asset 1.4 - 2,100 2,100 --------------- ------- ------- ------- ------- Total adjustment to equity 3,437 Total equity - UK GAAP 16,436 --------------- ------- ------- ------- ------- Total equity - IFRS 19,873 --------------- ------- ------- ------- ------- 1.1 Goodwill Under IFRS, goodwill is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired. As required by IFRS 1, 'First-time adoption of IFRS', goodwill recognised under UK GAAP has been tested for impairment at the transition date of 1 January 2004. No impairment loss was required to be recognised. In accordance with IFRS 1, this amount has been considered the carrying amount of goodwill in the opening IFRS balance sheet. For the year ending 31 December 2004, goodwill is not amortised under IFRS. As a result, the amortisation of goodwill as required under UK GAAP is reversed in the reconciliation from UK GAAP to IFRS with a corresponding reduction in expenses. 1.2 Pension obligation Under IFRS, pension obligations are recognised as a liability in the balance sheet based on the defined benefit obligation at the balance sheet date. In accordance with the transitional provisions of IFRS 1 the deficit has been recognised in the balance sheet at the transition date of 1 January 2004. Under UK GAAP the pension costs charged against profits were designed to spread the anticipated pension costs over the service lives of employees in the scheme. 1.3 Proposed dividend creditor Under IAS 10 'Events after the balance sheet date', dividends approved after the balance sheet date should not be recognised as a liability at the balance sheet date since the liability did not represent a present obligation at that date. Under UK GAAP, proposed dividends were recognised as a liability in the period to which they related. 1.4 Deferred tax asset Under IAS 12 'Income Taxes', deferred tax is provided on temporary differences between the book carrying value and tax base of assets and liabilities (a balance sheet approach). Under UK GAAP, deferred tax was provided on timing differences between the accounting and taxable profit (an income statement approach). 1.5 Share-based payments Under IFRS 2 'Share-based payments', the cost of employee share schemes, including SAYE schemes, is based on the fair value of the awards. Under UK GAAP, the cost of awards made under the Group's employee share schemes was based on the intrinsic value of the awards, with the exception of SAYE schemes for which no cost was recognised. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Mears Group (MER)
UK 100

Latest directors dealings